Although, Germany, the UK, US, Canada and Ukraine are phasing out domestic coal production capacity and Glencore has recently stated its plan to freeze production levels, expansion of production capacity in countries such as India and Indonesia is predicted to generate modest annual growth of 1.3% in coal production in the next four years, with output reaching 7.6 billion tonnes in 2022.
Coal production in India, Indonesia and Australia is forecast to grow at a respective compound annual growth rate (CAGR) of 10.9%, 3.9% and 2.3% between 2018 and 2022, with the high growth in India helping to reduce the country’s reliance on imports to feed its expanding coal-fired power generation.
Coal projects commencing operations: 2019 to 2022
There are over 300 coal projects potentially commencing operations between 2019 and 2022. Of these 92 are currently under construction, with the remainder under various stages of development. Of the total, 57 are located in Australia, 55 in India, 54 in China, 30 in South Africa, 18 each in Canada and Indonesia and 15 in the US.
The impact of these commencements will be marginally offset by over 100 coal projects expected to phase out over the same period, including 34 in India, 15 in China, 14 in South Africa and 13 each in the US and Australia.
After declining consecutively for three years, global coal production increased by 2.8% to 7,188.8Mt in 2017 and then rose again, albeit by a marginal 0.1% to 7,194.1Mt in 2018.
India, Indonesia and Russia
Growth has been driven by India, Indonesia and Russia, where production increased by increased by 3.1%, 1.2%, and 3.7% CAGR between 2014 and 2018, respectively, counterbalancing a decline in combined volumes from the rest of world declined of 2.5% CAGR over the same period.
Despite growth in 2017 and 2018, production has yet to reach historic levels as several mining companies have withdrawn, either partially or completely, from the coal business.
These include China’s Yanzhou Coal, which has disposed of five coal projects in the last five years, and Nacco Industries, Posco, CNX Resources who have collectively scaled back their coal assets by almost 50%. Rio Tinto, BHP and Vale have also sold almost all of their coal assets with the former completely exiting coal production.